Taiwan Dollar Forwards Slip on Concern Central Bank to Curb Gain

By Andrea Wong -
Dec 6, 2012

Taiwan dollar forwards fell on
speculation the central bank will slow appreciation in the
currency as exports recover. Bonds were little changed.

Official data tomorrow may show overseas sales rose 7.8
percent in November from a year earlier, after dropping in seven
of the last eight months, according to the median estimate of
economists in a Bloomberg survey. Global funds bought $247
million more local stocks than they sold today, taking net
purchases this week to $801 million, exchange data show.

“There’s been a lot of foreign inflows and I think traders
are testing the central bank’s limit,” said Tarsicio Tong, a
Taipei-based foreign-exchange trader at Union Bank of Taiwan. (2838)
“Even though we’re seeing signs of recovery in the economy, the
pace is quite slow.”

One-month non-deliverable forwards declined 0.1 percent to
NT$29.075 against its U.S. counterpart as of 4:27 p.m. in Taipei,
according to data compiled by Bloomberg. The forwards are at a
0.2 percent premium to the spot rate, which fell 0.1 percent to
NT$29.136, based on Taipei Forex Inc. prices.

Taiwan’s central bank has bought the greenback to counter
gains in the island’s currency on most days in the past seven
months, according to traders who asked not to be identified. The
monetary authority’s mandate is to keep relative exchange-rate
stability and to intervene in the event of abnormal moves,
Governor Perng Fai-nan said on Sept. 26.

The yield on the government’s 1.125 percent bonds due
September 2022 was 1.136 percent, compared with 1.137 percent
yesterday, according to Gretai Securities Market. The overnight
interbank lending rate was steady at 0.385 percent, according to
a weighted average compiled by the Taiwan Interbank Money Center.